A new deal for decommissioning: the three-part economic model

To achieve the UK’s decommissioning goals, we believe a new approach is required for onshore activities. From our research with experts in the energy sector and its supply chain we have developed a three-part economic model, with each element essential to the others being viable solutions for onshore decommissioning, not only financially but in maximising safe operations, minimising environmental risk and impact, and developing exportable expertise and capabilities that can benefit the UK economy.

The model combines three interdependent elements, all of which are crucial to success:

Economics of dry-docking

Dry docks offer potentially significant benefits for a wide range of structures that float or have a significant below-waterline component where these would be difficult to bring back directly to a quayside. Ideally, dry docks to be used in onshore decommissioning would also have deepwater access, gate access and previous experience of either offshore structure production or decommissioning.

Economics of space

There are substantial benefits to be gained by co-locating the range of activities involved in onshore decommissioning and waste management on a large single site. Logistics costs can be minimised, workflows can be better integrated, and there is greater scope for collaboration. Sites that offer extensive marine space as well provide wet storage, allowing projects to be stacked or even run concurrently. All of this is a major advantage over the limitations of small quayside footprints, where there are inefficiencies associated with having to move materials off-site once stripped and where complementary activities cannot be co-located.

Economics of scrap

To minimise costs it is essential to extract full value from the material salvaged through decommissioning. This means treating ‘scrap’ as an asset rather than a cost, and an activity that is seen as a job creator rather than an area where work is lost to overseas markets.

To achieve this would be to show how the UK can make the ‘circular economy’ more of a reality than an ambition. This aligns with the government’s aim of finding solutions that maximise value for our communities and the taxpayer, and would demonstrate this country’s capabilities in dealing with scrap responsibly to the highest standards.

It is the combination of these three components that can create a new economic model and a new deal for onshore decommissioning. When added together they can create benefits all round: reduced costs for industry, reduced costs for the taxpayer, job creation and new business opportunities in energy and supply chain sectors.